Taxpayers to Realize More Losses on GM Bailout

In late 2008, GOP President George W. Bush “loaned” a total of $19.4 billion in federal taxpayers’ money to the Big Labor-controlled General Motors Corporation (GM).

Mr. Bush assured taxpayers they would get their money back.

But by the spring of 2009, we learned we would never get back any of the money Mr. Bush had handed over to GM shortly before he left office. His successor as President, Democrat Barack Obama, announced GM would never have to settle up with taxpayers.

Echoing Mr. Bush, Mr. Obama and his advisors insisted that, when the government eventually sold off its whole stake in GM, taxpayers would get the entire $30 billion back, and perhaps even reap a profit.

Just last August, the President said it again.

He told a CNBC interviewer: “We expect taxpayers will get back all the money my Administration has invested in GM.”

‘Government Officials Are Willing to Take the Loss’

No one but the President himself knows whether he actually believed this prediction when he confidently made it time and again, but it certainly hasn’t been fulfilled.

In November 2010, the government sold off 57% of its stake in GM at a loss of roughly $3.5 billion.

And just last month, the Obama Administration informed the Wall Street Journal and other major media that this summer it planned to sell off much of its remaining stake at — barring a sudden and unlikely jump in the price of GM stock — another multi-billion-dollar loss.

GM’s stock would be worth even less, and taxpayer losses on Mr. Obama’s “investment” would be far greater, had not the special bankruptcy deal the company made with the White House included a $45.4 billion tax break on future profits in addition to nearly $50 billion in direct handouts.

Arguably, therefore, federal taxpayers’ total loss will be even greater than the $50 billion directly handed to Big Labor-controlled GM by the Bush and Obama administrations.

“Government officials are willing to take the loss,” the Journal reported April 19, because the White House wants to put the matter to rest before the beginning of the 2012 presidential election year.

Autoworkers Union Bosses Are The Chief Beneficiaries Of the GM Bailout

“The GM bailout was obviously an awful deal for taxpayers, but that doesn’t mean it was a good deal for the company’s rank-and-file employees,” said National Right to Work Committee President Mark Mix.

“As professor Todd Zywicki, a specialist in the law-and-economics field, recently pointed out in an article for National Affairs, had there been no bailout, GM ‘would almost certainly have been re-organized,’ producing a ‘company more competitive than the one that emerged from the bailout process.’

“As things stand, nearly two years after the company emerged from bankruptcy on taxpayers’ dime, its market share of U.S. sales continues to shrink, and its cars dominate Forbes magazine’s ‘worst on the road’ list. There isn’t much of a future in working for such a company.

“On the other hand, the United Autoworkers [UAW/AFL-CIO] union bosses whom the White House effectively left in charge of GM have profited from the bailout.

“They wielded their government-granted monopoly-bargaining power to impose wasteful work rules on the company that played a central role in dragging it down.

“Nevertheless, the bailout gave the UAW elite a 17.5% stake in the company, part of which they were able to sell for $3.4 billion last November. Relative to taxpayers and workers, the UAW brass have made out like bandits.”